The saga of how the top minds in Washington and on Wall Street have dealt with the deepening financial crisis in the U.S. would make a great Hollywood screenplay, except for this: it’s absurdly unbelievable.

Storyline: The largest bank in the United States (by assets), Citigroup, is discovered to have stashed away over $80 Billion of Byzantine securities off its balance sheet in secretive Cayman Islands vehicles with an impenetrable curtain around them. Citigroup calls this black hole a Structured Investment Vehicle or SIV. Wall Street insiders call it a “sieve” that is linked to the breakdown in trading of debt instruments around the globe and the erosion of wealth in assets as diverse as stock prices to home values. Additionally, tens of billions of dollars in short term commercial paper backed by these and similar Alice in Wonderland assets are sitting in Mom and Pop money market funds at the largest financial institutions in America, with a AAA rating from our renown credit rating agencies.

Setting: Picture the Titanic shortly after it crashed into the iceberg. Imagine that its officers want to pretend to all its passengers and crew and investors that there is no serious damage because the giant floating Citi did not really hit an iceberg; it just hit a wall of worry. It will be able to right itself in no time at all as long as everyone remains calm. Even though the lavishly appointed ship is dangerously listing (stock price fading daily) it says it can stay afloat by an ingenious bailout plan. Everyone just needs to walk calmly to the dining room, collect a tea cup, and pitch in with the bailout.

This is effectively what the U.S. Treasury has anointed as a game plan: Citigroup, the gargantuan and troubled bank, will be bailed out by virtue of all of its smaller competitors chipping in some money to a SuperSIV, a kind of Big Daddy Black Hole whose details are apparently too scary to release to the public. These are the very same competitors who lost market share to Citigroup because Federal regulators allowed it to grow fat and sassy by playing dirty, including collecting massive fees for hiding debt for bankrupt Enron, WorldCom and Italian dairy giant, Parmalat.

Flash Forward: The Federal regulators are busy attempting to restore confidence on the slippery deck of the listing craft. The U.S. Mint has just released a bronze coin celebrating the newly elected (albeit reluctant) Chairman of Citigroup, Robert Rubin, for his days as U.S. Treasury Secretary. [2] No mention on the flip side of the coin that Rubin was one of the cheerleaders who helped win the repeal of the depression era, investor protection legislation called the Glass-Steagall Act. Without that repeal, Citigroup would not exist; nor would its current threat to the financial infrastructure of our country. No mention, either, that Rubin went from government service to Citigroup’s board and has collected tens of millions in compensation for a job that did not involve a lot of sweat.

The small brass band on the deck of Citigroup has just been revved up to a big orchestra with Federal Reserve Board Chairman, Ben Bernanke, as Maestro. According to Bloomberg News, invitations have gone out to 16 financial institutions offering a personal, one-hour audience with Chairman Bernanke, ostensibly as the grand prize for chipping in to the SuperSIV bailout fund. (I’m visualizing a new commemorative bronze coin from the U.S. Mint that we can pass down to our children in lieu of a real currency with value. It would be inscribed: “The Shock and Awe of Crony-Capitalists: While We Were Looking for Foreign Threats in Mountainous Caves, Our Own Crony-Capitalists, In Broad Daylight and In Full View of Congress, Flew Our Largest Bank Into the World’s Largest Economy and Crashed Both to Smithereens.” )

Fade to Citigroup Set: Inside Citigroup, it’s business as usual. The ousted CEO, Chuck Prince, who had to own up to approximately $17 billion in write downs and Cayman Islands’ black holes, is receiving a bon voyage package that includes a performance bonus of $12.5 million, salary and stock holdings of $68 million, a $1.7 million pension, an office, car and driver for up to five years. And Citigroup, clueless as to what its own assets are really worth, is putting out research recommendations daily to investors, advising them what other companies are worth. On November 16, it said it particularly likes bank stocks (those entities with billions of dollars of Citigroup toxic waste in their money market funds).

Back to the Scene on the Titanic. We have thousands of opulently clad people pouring tea cups of opaque, muddy water from the giant craft when someone wants to know why the Captain isn’t there helping out. (The original captain, Sandy Weill, left early in the voyage via a lifeboat loaded with lots of provisions, a rolodex of criminal defense lawyers, and approximately a billion dollars.) It turns out that the new bronze coin captain, Robert Rubin, is not on deck bailing water because he has better things to oversee. He’s watching his dangerously listing ship load aboard a bunch of hapless, new passengers from a small ship that came alongside. That’s right. Citigroup, barely able to keep its own head above water, pay its dividend, shore up its capital, and regain the confidence of shareholders, has joined with other investors to spend $6.3 Billion on a British water company, Kelda Group Plc. [3]

And while underwater Citigroup buys water, what, you might ask, is Congress doing about the millions of struggling homeowners across America who were tricked into land-mind mortgages by predatory lenders like Citigroup’s CitiFinancial and are facing imminent foreclosures on their homes. [4] [5] Congress is also fiddling rather than bringing strong legislative action against its biggest campaign contributors.

Like I said, it’s just too preposterous for a movie; but it’s the tragic new reality of Crony-Capitalist-Owned America.

PAM MARTENS worked on Wall Street for 21 years; she has no securities position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire.

[5] Read an affidavit filed with the Federal Trade Commission by a former Assistant Manager of CitiFinancial on how she and colleagues targeted the uneducated, inarticulate, minority, very old, very young or very gullible.